Brokers and analysts said these investors also cut their short positions ahead of the release of the exit polls on Monday evening. "Foreign investors who had created short positions in futures market to hedge their equity portfolio reversed their positions on Friday," said Jitendra Panda, managing director and chief executive officer of Peerless Securities.

FIIs were sellers of index options worth Rs 3,024 crore on May 5-8. These investors also sold index futures to the tune of Rs 1,250 crore between May 6 and May 8. "FIIs are rebuilding long positions in the markets," said Yogesh Radke, head of quantitative research, Edelweiss Securities.

Nifty May futures added 6.65 per cent or 9.06 lakh units in open interest on Friday while Nifty June futures added 11.87 per cent or 1.38 lakh units in open interest.

The volatility index of India, VIX, has increased 15 per cent this week to close at 37.7 per cent, which is the highest level since October 2011. Analysts say there could be further rise in volatility ahead of exit poll results.

Options traders are betting that the Nifty would hit 7,200-7,400 in May as there has been a huge buildup of positions in Nifty call options around these strikes. Nifty 7,200 call options saw an increase in open interest or outstanding positions of 20.65 lakh shares, a surge of 71.9 per cent from Thursday closing.

The premiums have jumped 145 per cent fromRs 62.85 to Rs 154 in a single day, which indicates that traders expect the market to rise further. Nifty 7,400 call options witnessed an increase of 14.71 lakh units in open interest, a jump of 125 per cent from previous day closing. The premiums have surged 193 per cent to Rs 97.80.

"We expect markets to consolidate around current levels till May 15, and may make fresh attempt to rise further on May 16, as markets are expecting a strong political mandate at the Centre," said Radke. Open interest in Bank Nifty futures jumped 16.90 per cent or 3.02 lakh shares.

The Bank Nifty has gained 5 per cent this week, and has outperformed the benchmark Nifty this week, which has risen only 2.5 per cent. Analysts are advising pair trade between Bank Nifty and Nifty.

"The Bank Nifty open interest has jumped 37 per cent in May series whereas Nifty open interest has remained almost unchanged in May series. Hence, we are advising a pair trade where investors can go long on Bank Nifty and short Nifty till exit poll results are announced," said Amit Gupta, head derivatives, ICICI Direct.